Category: Tips (11)

CONGRATULATIONS! So you have finally sealed the deal on your new home. Now, how much should you spend on renovations before moving in?

Truth be told, hacking at and tearing down walls of a newly-bought property are a norm these days, be it a brand new or lived-in unit.

How extensive the renovations should be would rest on the new owner’s investment objective; why he or she bought the property in the first place. Unless the intention is to flip the unit as quickly as possible, do expect owners to invest in some form of renovation works, or at least fit-outs for especially the high-rise units, which face renovation restrictions and limitations.

Space utilisation is very individualistic and personal. Not only do needs and wants vary from family to family, diverse views are common within a family. Understanding this, some developers have been known to walk the extra mile by offering customers varied layout options of the plan – that is, before construction work starts. Unfortunately, such customisation options could and would develop into a pretty nightmarish experience for both the developer and the buyer in mass housing.

When selling your home, there is the perfect combination of things to do in preparation. While every seller will have unique circumstances, there are several top tactics that will benefit every home seller.

1) Make your Home Green and Eco-Friendly

If a home isn’t selling, evaluate your home and make modifications to improve your chanced of a speedy sale. Recent studies show that savvy Minneapolis real estate buyers are looking for greener homes that boast of energy efficiency. Turning your home “green” can seem like an expensive and daunting task but it doesn’t have to be! Start off by making small changes. Replacing your bulbs with fluorescent lights will save you and your buyer energy while also giving your home a warm and natural light. Re-evaluate where you’re leaking warm or hot air and explore options to re-insulate and stop airflow. Replacing old appliances is always a go to when thinking of becoming more Eco-friendly. Newer appliances save energy and water while making your rooms look updated and neater.

2) Upgrade your Home with Top Selling Features

This is easier to accomplish by knowing which home remodeling projects help sell a home. This doesn’t mean that installing a heated pool at this moment or a fountain in the front yard. By choosing home upgrades carefully, you can expect a better return on your money and time. It’s really easy as an owner, to start to overlook wear and tear in your home.

You may be better positioned to draw a strong home buyer pool by removing old wallpaper and repainting key rooms with neutral colors. Replace old carpet with new carpet or consider upgrading to hardwood floors if you have the means. It’s important that you grab a buyer at their first walk through of your home. You don’t want them to have to think about it, you want them to be impressed with what your house offers. Upgrading to stainless steel appliances and granite countertops will give the wow impression that you want.

3) Freshen up your Home’s Cub Appeal

While Realtors are fond of the phrase “location, location, location”, you can’t forget that a home in a great location still benefits from great curb appeal. Potential buyers who are driving by or walking the neighborhood will be quick to make assumptions about what the inside of the house looks like from the outside. Make your front door say “wow” and update your address numbers and mailbox for a sharp look. Small upgrades give your house a polished look.

4) Stage your Home after Understanding Better what Buyers Want

Staging your home is a very real aspect of getting your house ready to sell. How you live in your home is not how it should look when showing. The biggest step you need to take is to de-clutter your possessions. Start to throw anything that will be tossed when you move. If you’ll be putting items in storage, it will be worth it to remove them now. Personal photos make it harder for a buyer to picture themselves in the house. Rearrange your home to optimize the space of your house with items commonly found tasteful.

5. Select the Best Real Estate Agent to Represent Your Home

It may be easy to select an agent based on suggested home list price. It is true that a prospective home buyer may overbid another purchase offer to be the winning bidder. However, typically it more important to have an agent representing your interests that will not overprice your home, but rather focus on marketing its best features. Discuss in advance of listing your home what your potential net profit may be.

Real estate agents and brokers who have been around awhile understand the skill, time, effort and measure of luck it takes to beat out the competition and get awarded a signed property listing agreement.

They also understand the marketing process; those things that must be accomplished in order to present the property to the real estate community, and then subsequently how to properly handle offers to purchase.

Okay, but on the other hand, real estate agents who have never listed and sold rental income property might not know the full scope of physical inspections that must be coordinated once the rental property is sold and enters escrow.

So for those of you who are just starting to service commercial real estate let me give you an idea of what you should expect to address in the way of property inspections. Of course we’re assuming that these inspections are requested by the buyer in the sale agreement as “subject to the buyer’s approval” and accepted by the seller.

1. The Walk-thru Inspection

A “walk-thru” inspection is where the buyer gets to physically enter and examine all the units in the rental property with an eye on the over-all condition and quality of the carpets, appliances, fixtures, and tenants. This inspection regularly takes place during escrow because sellers are reluctant to disturb or alert tenants about a sale until they are satisfied with the buyer’s financial ability to make the purchase and have an accepted signed-around purchase agreement.

2. The Infrastructure Inspection

This is where the buyer typically hires licensed contractors to make inspections for such things as pest and dry rot, plumbing, electrical, roofing, and maybe even mold. Obviously these inspections will be a cost to the buyer so they shouldn’t be ordered until the walk-thru inspection is approved.

I found my dream house. The developer’s office said the project was selling like hot cakes. Sales were on a ‘first come first serve basis’ and I must pay a deposit otherwise she would have to give it to someone else. Or was it a booking fee she called it?

I begged her to give me one week. Three days, she said. How very sweet and understanding of her. Bank loan? No problem… 85% loan margin? No problem, she assured me. If I could not get a housing loan I could always cancel and get my money back. I left the developer’s office feeling on top of the world. I had secured my dream house by paying the deposit. My dream turned into a nightmare when I could not get a bank loan. I had no choice but to forgo the house.

As if letting go of my dream was not bad enough, the developer now refuses to give me back my deposit. The lady said her hands were tight because it’s a management decision. It was not stated in the ‘option letter’ or ‘booking form’ that my purchase was subject to the loan approval. On reading the terms and conditions in the option letter/booking form, I now realised that all terms were inclined in favour of the developer.

What do I do? I just want my money back. I don’t mind if they keep a small sum for cost of paper work and for administrative purposes.

The above scenario is not at all uncommon.

Many house buyers are unaware of lending guidelines requiring loans to be tagged to net income as opposed to gross income. Many find that they are unable to obtain the financing they want and have to withdraw from an intended purchase before the sale and purchase agreement is even signed. The developer then refuses to refund the deposit or booking fee or whatever other payment which may have already been paid.

The unfortunate part about this whole thing is that house buyers do not have the luxury of a learning curve in which they can acquire the necessary skills to avoid getting themselves into trouble. Very often by the time they realised that they have made a mistake, it is already too late and the result can be traumatic and financially crippling.

This very noble and seemingly simple undertaking of buying a house, in a lot of cases, have gone terribly wrong.

This is an additional tips for RPGT that we discussed it in the early blog post. The RPGT is only imposed on net gains after deducting all costs involved such as the purchase price, renovation cost, legal fees and stamp duty. The government increased RPGT (Real Property Gains Tax) to 15% from the current 10% on all properties sold before two years from the date of purchase, and to 10% from 5% for properties sold between the third and fifth year in the recent budget.

Real estate property owners who are not profit motivated and not involved in speculation are eligible for RGPT exemptions on these accounts:

RPGT exemption on gains from the disposal of one residential property once in a life time to individuals (citizens and permanent residents);

RPGT exemption up to RM10,000 or 10% of the net gains, whichever is higher, from the disposal of real property by individuals (citizens, permanent residents and non-citizens); and

RPGT exemption on gains from disposal of real property between husband and wife, parents and children, grandparents and grandchildren.

When it comes to purchasing a property, it is vital to look into the possible steps to save on interests. Most Malaysian only pays a minimum loan installment every month and this cause the loan amount to double up due to the interests. There are 2 simple ways where the buyers can save money on bank interests.

1) Bi-weekly Payment Package
Instead of choosing a monthly installment, buyers can choose Bi-weekly installment instead. This payment method is popular in foreign countries, but not so popular among Malaysians. Instead of making a monthly payment, the buyers can pay half the amount, twice a month. Please refer to the example below. By using this method, the buyers can save at least RM42,495.71 in interest and 4.5 years on loan tenure. But everyone should be wondering what’s the catch behind this. The catch is, the buyers need to pay 1 month of extra installment per year, since the payment is calculated every 14 days. So instead of making 24 installments a year, the buyers need to pay 26 installments. Yet it does make a big differences in the savings.

2) Extra Payments Towards The Loan Principle
The second step would be, calculate 10% of your monthly installment and pay the additional amount towards the principle of the loan. By this the buyers can save RM78,000 interest and 8.5 years of tenure.